Govt clears scheme to rebate central, state embedded taxes for textiles sector

The government Thursday approved a scheme for rebate of all state and central embedded levies for apparel and made-up textile segments, which would make shipments zero-rated, thereby boosting the country's competitiveness in export markets.

The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi here.

It also enhanced the rebate for apparel and made-up segments. The made-up segment of textiles includes products like bed-sheets, blankets and curtains.

Currently, Remission of State Levies (RoSL), which is to offset indirect taxes levied by states such as stamp duty, petroleum tax, electricity duty and mandi tax that were embedded in exports, is provided to textiles exporters.

"The decision which also extends rebate up to March 31, 2020, will greatly benefit apparel & made-ups manufacturers/exporters," Textiles Minister Smriti Irani said in a tweet.

She said the apparel and made-ups have a combined share of 55 per cent (around USD 21 billion) in the total Indian textile export basket and the decision to enhance rebate will have a direct impact on these segments, thereby increasing competitiveness of India's textile exports globally.

The decision also entails change in disbursal mechanism whereby the rebate of all embedded state and central levies will be done through the scrip system.

"Fulfilling one of the primary demands of the industry, Rebate of State and Centre Levies/Taxes will be done through IT-driven Scrip System thereby preventing delay & ensuring speedy disbursal," Irani said in another tweet.

The decision will enable the government to take various measures for making exports of apparel and made-ups zero rated.

"The proposed measures are expected to make the textile sector competitive. Rebate of all embedded state and central taxes/levies for apparel and made-ups segments would make exports zero-rated, thereby boosting India's competitiveness in export markets and ensure equitable and inclusive growth of textile and apparel sector," an official statement said.